Commuters will be paying more for their journeys as fares are set to be increased further by over 100 per cent anytime soon in Malawi.
This time around is not due to fuel shortages or its rising costs but a 100 per cent increasing of insurance premiums on cars especially those used in public transport.
Minibus Operators Association of Malawi (Moam) general secretary Coxley Kamange said they have no choice but implement a bus fare increase to ensure that they are in business.
He said before the new premiums, which were brought from 1st January, K59,000 ($352) was paid to insure a minibus at the now liquidated Citizen Insurance Company and K82,000 ($491) and K130,000 ($778) at Prime Insurance for Moam members and non- members, respectively.
But he said all that has been increased by 100 percent.
“But now it is not making business sense as we have to pay K221,000 [$1,323] for minibus insurance,” said Kamange.
If implemented, the 100 percent bus fare increase will translate into passengers travelling between Lilongwe and Blantyre paying K3,000 ($18) up from K1,500 ($9).
Any movement in transport costs in Malawi always prompts multiplier effects as other commodity prices shoot because transport constitutes over 60 per cent in Malawi’s price build-up of goods.
Moam last increase bus fares in November last year by 20 percent after an average 26.4 percent of fuel price increases.
According to The Nation, Malawians are also anticipating another significant fuel hike in the near future as the country weakens the value of its currency, the kwacha, in a desperate attempt to get back on track the derailed Extended Credit Facility (ECF) programme with the International Monetary Fund (IMF).
President Bingu wa Mutharika has been a strong critic of a further devaluation of the currency, arguing it will hurt the poor.
But economic analysts believe there is a limit to which Mutharika can resist the move as continued suppression of the kwacha’s value will further the fragile economy.
Currently, the bulk of the country’s donors are withholding over $500 million (around K83 billion) in budgetary support in the absence of a programme with the IMF.Follow and Subscribe Nyasa TV :